The report is an overview ofNepal's economic development, comprising five volumes,which include the main report, followed by reviews onagricultural and rural development, on the social sectors,and, the transport sector. Although development progress isnoteworthy in many areas, considerable evidence of improperresource spending exist, thus, the main objective of thisreport is to identify the incentives, and institutionalfactors that contributed to this spending, and proposerecommendations. Systemic factors have consistently hinderedimplementation, and development results, such as deficientbudget planning, resource allocation, and expendituremanagement, coupled with the lack of ownership of projects,and programs which contributed to poor performance.Institutional weakness, and governance issues remain themost critical aspects affecting effectiveness of publicspending across sectors in Nepal. The report suggests thattraditional budget reforms alone, will not be effective toimprove public resource management, rather, changes in thepolitical environment, and institutional capacity arerequired, prior to the much needed reforms. Given the fiscalconstraints, the government should promote privateparticipation to undertake economic activities, and, furtherenhance and promote, public involvement in social sectorsdevelopment, and greater local ownership of publicexpenditure programs.
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